Regularly, a debate seems to emerge as to whether alliances have an on going future. The latest salvo from James Hogan, CEO of Etihad:
The traditional airline alliances have evolved into slow-to-respond, bureaucratic organisations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other.”

Tim Clark, CEO of Emirates said in 2009: We see alliances as having significant anti-competitive elements and believe that our membership in one would be an artificial brake on our own business plans

Willy Walsh of British Airways owner which is part of One World said “alliances “exist only because of restrictions on mergers for which the three main global groupings and are a ‘poor substitute‘” Further,
rules limiting foreign ownership of European airlines are “ridiculous” and a fresh bout of consolidation is needed: “The alliance gives you good revenue synergies, but consolidation gives you cost and revenue synergies,” Mr Walsh said.

There are three major airline alliances across the globe
One World: 12 members
SkyTeam: 19 members
Star Alliance: 27 member airlines

For customers, the advantages of airline alliances are:

  • through ticketing
  • reducing the need to be in a myriad of frequent flyer programs with reciprocal points earning
  • recognition of Frequent Flyer elite status by partner airlines

There have been several interesting recent moves impacting on the traditional airline alliances:

  • Etihad have linked with Virgin Australia ( non aligned), Air France-KLM (skyteam) and Air Berlin (One World). Hogan said:
    We have hand-picked like-minded partners with whom we can work collaboratively to build revenue across a broader network and reduce operating costs.”
  • Virgin Australia have a Delta (Skyteam) relationship as well as one with Singapore (Star) and Air New Zealand (Star)
  • Delta (Sky Team) who own 49% of Virgin Atlantic (non aligned) have announced a joint venture on UK-USA flights.
  • Qantas has recently shifted a significant amount of business from its One World partner British Airways to non aligned Emirates
  • Consolidations and mergers are shifting alliance memberships eg  The US-American merger means US will leave Star for One World, Continetal left SkyTeam just before its United merger
  • In March, 2013, after the merger of Lan (One World) and TAM (Star Alliance), LATAM announced they have chosen Oneworld and TAM will leave Star from the second quarter of 2014
  • Lufthansa is almost its own alliance with its European airline subsidiaries:  Austrian, Brussels Airlines and Swiss
  • IAG now owns British Airways and Iberia</li

What is your thinking? Do the Alliances have a future?

Do Alliances have a future?

  • Yes (0%, 0 Votes)
  • There will be Some Future for Alliances (0%, 0 Votes)
  • No-it is an old Model (100%, 0 Votes)

Total Voters: 0

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  • jack said,

    airline alliances are still far more useful than bespoke partnerships that only helps the airline but not the passenger

  • EagerTraveler said,

    Alliances will only survive when they admit a gulf partner… If they don’t they will be irrelevant.

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